BILL NUMBER: AB 2864	CHAPTERED  07/05/00

	CHAPTER   80
	FILED WITH SECRETARY OF STATE   JULY 5, 2000
	APPROVED BY GOVERNOR   JULY 5, 2000
	PASSED THE SENATE   JUNE 15, 2000
	PASSED THE ASSEMBLY   JUNE 15, 2000
	AMENDED IN SENATE   JUNE 15, 2000
	AMENDED IN ASSEMBLY   MAY 25, 2000

INTRODUCED BY   Assembly Member Torlakson
   (Coauthors:  Assembly Members Alquist, Cedillo, Corbett, Davis,
Ducheny, Dutra, Gallegos, Hertzberg, Jackson, Kuehl, Longville,
Lowenthal, Mazzoni, Reyes, Romero, Shelley, Steinberg, Strom-Martin,
Thomson, Villaraigosa, Washington, Wiggins, and Wildman)
   (Coauthors:  Senators Alarcon, Chesbro, Figueroa, Murray, Perata,
Polanco, Sher, and Vasconcellos)

                        MARCH 6, 2000

   An act to add and repeal Article 2.10 (commencing with Section
65891) of Chapter 4 of Division 1 of Title 7 of the Government Code,
and to add Chapter 3.7 (commencing with Section 50540) to Part 2 of
Division 31 of the Health and Safety Code, relating to balancing jobs
and housing.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2864, Torlakson.   Balance of jobs and housing.
   Existing law requires the Department of Housing and Community
Development to prepare a guidebook for use by governmental agencies
in planning and developing a housing supply to meet the need created
by employment growth.  Existing law requires a city or county to
include a housing element in its general plan, and, for that purpose,
prescribes criteria for determining the city or county share of the
regional housing needs, including a requirement that the distribution
of regional housing needs take into account, among other things,
market demand for housing and employment opportunities.
   This bill would create the Inter-Regional Partnership State Pilot
Project to Improve the Balance of Jobs and Housing, which would be
monitored by the Department of Housing and Community Development, to
test and evaluate policies and incentives, as specified, to mitigate
current and future imbalances of jobs and housing in specified
counties.  The bill would make these provisions inoperative on July
31, 2004, and would repeal them as of January 1, 2005.
   The bill would also establish the Jobs-Housing Balance Improvement
Program that would require the department to make grants to eligible
local agencies from funds appropriated in the Budget Act of 2000 for
assistance in attracting new business and jobs in "housing rich"
communities that lack an adequate employment base to match the amount
and cost of housing in those communities, for the creation of
economic development strike teams to target and coordinate outreach
to employees who may choose to locate within the community, and for
specified capital outlay projects designed to encourage the
construction of housing in urbanized areas.
   This bill would also require a specified amount of the funds
appropriated in the Budget Act of 2000 to be transferred to the
existing Rental Housing Construction Fund, which is continuously
appropriated to the department, for purposes of an existing urban
predevelopment loan program administered by the department, subject
to specified conditions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Article 2.10 (commencing with Section 65891) is added
to Chapter 4 of Division 1 of Title 7 of the Government Code, to
read:

      Article 2.10.  Inter-Regional Partnership (IRP) State Pilot
Project to Improve the Balance of Jobs and Housing

   65891.  This article may be cited and shall be known as the
Inter-Regional Partnership (IRP) State Pilot Project to Improve the
Balance of Jobs and Housing.
   65891.1.  For the purposes of this article, the following terms
have the following meanings:
   (a) "Inter-Regional Partnership" or "IRP" means an organization of
elected officials from the Counties of Alameda, Contra Costa, Santa
Clara, San Joaquin, and Stanislaus and a number of cities therein,
that was formed under the sponsorship of the three regional councils
of government, the Association of Bay Area Governments (ABAG), the
San Joaquin Council of Governments, and the Stanislaus Council of
Governments, that oversee regional land use and transportation
planning for the five counties.
   (b) "Incentives" include, subject to negotiations with appropriate
state and local agencies, the following:
   (1) Providing tax credit priority for development of multifamily
residential construction in areas with job surpluses and for job
generating projects in areas with housing surpluses.
   (2) Providing a return of property tax for development of
affordable housing in areas with job surpluses and for job generating
projects in areas with housing surpluses.
   (3) Pooling of redevelopment funds.
   (4) Tax-increment financing for jobs-housing opportunity zones
based on the redevelopment model.
   (c) "Jobs-housing opportunity zone" means a zone selected by the
IRP State Pilot Project for the purpose of mitigating current and
future imbalances of jobs and housing in the Counties of Alameda,
Contra Costa, Santa Clara, San Joaquin, and Stanislaus that has the
following characteristics:
   (1) Is no smaller than 50 acres and no larger than 500 acres.
   (2) Contains significant portions of land that are vacant,
underutilized, and suitable for urban use.
   (3) Is created for the purpose of either providing needed
workforce housing if there is a surplus of jobs or providing jobs for
the area's workers if there is a surplus of housing.
   (4) Is eligible to receive incentives, subject to negotiation with
appropriate resource agencies.
   (5) Is serviced by adequate infrastructure and transit service, or
has commitments to provide adequate infrastructure and transit
service, to support significant proposed development.
   (6) Is intended to support development that will improve the
jobs-housing imbalance across the five-county IRP area.
   65891.2.  It is the intent of the Legislature to establish the
Inter-Regional Partnership (IRP) as a state-supported pilot project
to test and evaluate a variety of policies and incentives designed to
mitigate current and future imbalances of jobs and housing in the
Counties of Alameda, Contra Costa, Santa Clara, San Joaquin, and
Stanislaus.
   65891.3.  The Legislature finds and declares all of the following:

   (a) California will experience significant population growth in
the coming decades.  In the San Francisco Bay Area, one million new
residents are forecast by the year 2020.  An equal number of new jobs
are expected during the same time period.  However, less than
500,000 new housing units are expected to be built in an already
costly and competitive housing market.
   (b) Many central valley communities expect to double or triple in
size, but most of them will not attract equivalent numbers of new
jobs.  Instead, thousands of central valley residents are expected to
commute far into the bay area, often driving two hours or more each
way.  The challenges to transportation, air quality, and social
quality of life are enormous.  Projections estimate the current
number of less than 100,000 daily Altamont Pass commuters will more
than double to 250,000 by the year 2020.
   (c) These growth-related issues cut across county and regional
boundaries.  The Inter-Regional Partnership is intended to provide a
forum for neighboring jurisdictions governed by different regional
councils of government to deal collaboratively with land use,
transportation, and air quality issues that affect a five-county
region.
   (d) The IRP State Pilot Project will stand as an important example
for other regions in the state in dealing with multijurisdictional
problem solving and addressing land use planning across metropolitan
borders.
   (e) The need for communication and cooperation among these
jurisdictions is underscored by the fact that Alameda County recently
sued the City of Tracy in San Joaquin County concerning the
environmental impacts of a planned housing development on the western
edge of the county where a majority of residents would be assumed to
commute into the San Francisco Bay Area through Alameda County.
   (f) These interjurisdictional planning issues are not unique to
the IRP's five-county area; several other expanding metropolitan
areas in California are beginning to experience similar problems.
However, the geographic imbalance in housing and job growth in the
IRP area is among the country's most extreme examples, and, driven by
continued employment growth in the Silicon Valley, is predicted to
worsen significantly in the coming years.
   (g) The housing market in the Silicon Valley is now the most
expensive in the nation.  Land being developed for housing in the San
Joaquin Valley is some of the highest quality agricultural land in
the world.
   (h) The IRP area is the best place in the state, and probably one
of the best in the country, to implement a pilot program designed to
mitigate the myriad of problems associated with unbalanced and
uncoordinated growth.
   (i) By implementing this pilot program, the state will play an
important role in creating a more sustainable future pattern of land
use in the IRP area.
   (j) Active investment of state resources now in the interregional
balancing of jobs and housing opportunities will reduce the need for
costly transportation infrastructure investments in the future.
   (k) The current path of land development in the five-county area
will have very costly transportation and environmental impacts if
efforts are not made soon to link job growth to housing production.
   65891.4.  (a) The Inter-Regional Partnership (IRP) State Pilot
Project to Improve the Balance of Jobs and Housing is hereby
established.
   (b) The Department of Housing and Community Development shall be
the state agency responsible for monitoring the IRP State Pilot
Project.
   (c) The pilot project shall consist of two phases:  (1) research
and development, as specified in Section 65891.5, and (2)
implementation, as specified in Section 65891.7.
   65891.5.  (a) During the first year after the date that funding is
received, the IRP shall complete all the necessary research,
outreach, and negotiation to allow the successful establishment of
jobs-housing opportunity zones throughout the five IRP counties.  At
the end of this phase a series of outreach meetings shall be held
with local jurisdictions and the public to present the data and
recommendations for locations of jobs-housing opportunity zones.
Local jurisdictions wishing to participate in the pilot project shall
enter into agreements with the IRP to pursue the regional goals and
objectives of opportunity zones within their jurisdictions.
   (b) The first phase shall provide all of the following:
   (1) An integrated Geographic Information System (GIS) enabling
easy comparison of data on land use and transportation trends and
alternative scenarios across the five-county area.  The GIS mapping
shall focus on obtaining existing data from a variety of sources and
integrating them into a single system to allow accurate analysis and
scenario work on an interregional scale.  The Legislature finds and
declares that the IRP's GIS system will be a crucial tool for use in
determining the location of proposed jobs-housing opportunity zones.

   (2) General types of data to be assembled in the GIS system shall
include:
   (A) Demographic data, including population and employment by
census tract.
   (B) Projected growth data consisting of information on where
growth, including jobs generation and new housing location, is
predicted to occur over a 20-year period.
   (C) Transportation information such as traffic capacity and usage,
transit access and usage, and journey-to-work data.
   (D) Land use information, including general plan layers and zoning
designations.  It is the intent of the Legislature that to reduce
costs and setup time, the IRP's GIS undertaking shall not include
parcel-level data.
   (E) Basic environmental data, including floodplains, slopes, and
contamination.
   (3) A refined description of the incentive program for application
to the jobs-housing opportunity zones within the IRP counties.  This
list shall include thorough descriptions of fiscal and nonfiscal
incentives.  A variety of state departments shall be involved in
determining what incentives might be made available, including, but
not limited to, the Office of Planning and Research, the Department
of Housing and Community Development, the California Housing Finance
Agency, the Department of Transportation, and the Department of
Conservation.
   (4) Recommendations for establishing 5 to 10 official
Inter-Regional Partnership Jobs-Housing Opportunity Zones located
throughout the five-county area.  Using the GIS system and meeting
with local jurisdictions, the IRP shall propose a series of
jobs-housing opportunity zones.  Each zone shall have specific goals
and a description of the type of action desired to attain these
goals, including recommended state sponsored incentives intended to
encourage the desired results.  The types of incentives requested may
vary by zone location and type.  Zones located near, or with good
transit access to, existing major employment centers may receive
incentives designed to promote reasonably priced housing development.
  Zones located far from existing employment centers, but near, or
with good transit access to, significant workforce housing supply,
may receive incentives designed to promote employment development.
   65891.7.  (a) During the second phase of the pilot project,
opportunity zones shall be established.  Negotiation between the
state, the IRP, and local jurisdictions shall result in formal
agreements to implement specific jobs-housing opportunity zones.
   (b) Results of the second phase shall include:
   (1) Final selection of not less than 5 nor more than 10 official
IRP Jobs-Housing Opportunity Zones that shall be equitably
distributed among each of the five IRP counties.
   (2) Reports that include results of GIS analysis and clearly
illustrate the benefits of prescribed developments toward creating an
interregional jobs-housing balance.  Desired outcomes and actions
for each zone shall be included in the report.
   (3) The IRP shall enter into a memorandum of understanding with
each jurisdiction having one or more of the selected zones for the
pilot program and with appropriate state agencies outlining outcomes
and incentives to be awarded for stated outcomes.
   65891.8.  (a) The goals of the IRP and the pilot project are to:
   (1) Encourage economic investment, including job creation, near
available housing.
   (2) Encourage housing to be located near major employment centers.

   (3) Encourage development along corridors served by transit and
near transit stations.
   (4) Encourage more sustainable and effective transportation
between job and housing centers.
   (b) The IRP shall contract with a qualified consultant to conduct
an evaluation of the pilot project.  Ongoing monitoring and
evaluation shall be conducted throughout the implementation of phases
one and two.  After zones have been selected and projects begin on
each of the zones, the progress of each project shall be evaluated.
The evaluation shall assess the gap between jobs and housing by
comparing the ratio between the number of jobs and the number of
housing units in a local jurisdiction with a designated IRP
Jobs-Housing Opportunity Zone, before an opportunity zone project has
been approved and after it has been completed.  The comparison shall
be based on an optimum balance of jobs and housing being one and
one-half jobs for one housing unit, as determined by the Department
of Finance.  The following data shall be used in determining that a
jobs-housing balance has been mitigated in a jurisdiction:
   (1) The number of building permits issued as provided by the
California Industrial Research Bureau.
   (2) The number of jobs generated, as determined by the Employment
Development Department.
   A final report shall be submitted by the IRP to the Department of
Housing and Community Development on or before July 31, 2004.
   65891.9.  Funding for the IRP State Pilot Project shall be
provided in the 2000-01 Budget Act.  The IRP State Pilot Project
shall begin on January 1, 2001.
   65891.10.  No local jurisdiction shall be required to participate
in the pilot project.  This article shall have no fiscal impact on
any local jurisdiction.
   65891.11.  This article shall become inoperative on July 31, 2004,
and, as of January 1, 2005, is repealed, unless a later enacted
statute that is enacted before January 1, 2005, deletes or extends
the dates on which it becomes inoperative and is repealed.
  SEC. 2.  Chapter 3.7 (commencing with Section 50540) is added to
Part 2 of Division 31 of the Health and Safety Code, to read:

      CHAPTER 3.7.  THE JOBS-HOUSING BALANCE IMPROVEMENT PROGRAM

   50540.  This chapter shall be known and may be cited as the
Jobs-Housing Balance Improvement Program.
   50541.  The Legislature finds and declares all of the following:
   (a) Despite strong economic growth and record-level unemployment
in most areas of the state, California has fallen seriously short of
its policy of providing every California family with the opportunity
to live in decent, affordable housing in a suitable living
environment.
   (b) The Department of Finance estimates that to meet California's
housing need, 230,000 new residential units per year must be built.
   (c) For each of the last eight years, California has produced only
50 percent of the housing to meet its need, resulting in a critical
accumulated deficit.
   (d) Although the lack of sufficient housing is a statewide problem
cutting across all geographic areas and income categories, it is
most severe in strong economic job center markets where high housing
costs make it extremely difficult for working-class Californians to
afford a home.
   (e) Increasingly, due to high housing costs and constraints on
regulatory development policy, California workers are forced to seek
homeownership opportunities further and further away from their
places of employment.
   (f) Conversely, many communities where land is more available and
less expensive are located long distances from high-growth job
centers.  Those developments are occupied predominantly by commuters
who travel long distances outside of the communities in which they
live and inflate the price of housing.
   (g) The exportation of housing demand to outlying areas, including
agricultural areas, carries with it definite environmental and
quality of life consequences.
   (h) Throughout the state, major investments have been, and are
being made, in public transit infrastructure.  The use of this
infrastructure depends on local decisions about the location of jobs
and housing to better manage traffic flow and to direct new
development and fiscal resources to revive existing urban centers,
especially central business districts and infill sites.
   (i) Ensuring that transit facilities are surrounded by compact,
mixed-use development is a key to increasing transit ridership and
reducing reliance on the automobile for all trips.  However,
neighborhood concerns, complex ownership issues, and local government
preference for major sales tax generators make the planning and
environmental clearance process for transit-oriented communities very
expensive and time-consuming.  Investment in pedestrian-friendly,
compact transit-village development will reduce long-term
infrastructure costs associated with accommodating new highways and
roadways.
   (j) The failure to provide California's growing workforce an
affordable place to live close to one's place of employment is viewed
by business, environmental, civic, and labor leaders as a serious
threat to sustaining long-term economic prosperity and environmental
quality.
   (k) Communities need effective tools to promote and reward
development in job centers of the state, to reward the development of
affordable infill housing as well as mixed-use development that
includes housing close to transit, within urbanized areas, and to
attract and add employment to areas that lack a sufficient employment
base.
   50542.  It is the intent of the Legislature in enacting this
chapter:
   (a) To develop an incentive-based strategy to encourage the
construction of housing in those areas of the state that over the
last decade have experienced the greatest increase in job growth but
have not kept pace with necessary housing.  This may include the
construction of infill housing and transit-oriented development that
includes housing, within existing urbanized areas.
   (b) To attract new business and new jobs to areas that lack a
sufficient employment base in relation to the housing they already
provide.
   (c) To provide local governments with state funding to reward the
approval and construction of housing, particularly housing for
California's working class, in strategically defined areas.
   50543.  (a) Five million dollars ($5,000,000) of the funds
appropriated for purposes of this chapter in Item 2240-114-0001 of
Budget Act of 2000 shall be used pursuant to subdivisions (b) and
(c).
   (b) The department shall provide state grants to local agencies to
assist them in attracting new business and jobs in "housing rich"
communities that lack an adequate employment base to match the amount
and cost of housing in those communities.
   (c) A local agency that has completed an economic development
strategic plan may apply for a grant to create an economic
development strike team to assist the local agency in better
targeting and coordinating outreach to employers who may choose to
locate jobs within the community.
   (d) In order to be eligible for a grant pursuant to this section,
a local agency shall have an adopted housing element that the
department has determined pursuant to Section 65585 of the Government
Code to be in substantial compliance with the requirements of
Article 10.6 (commencing with Section 65580) of Chapter 3 of Division
1 of Title 7 of the Government Code.
   (e) The department shall establish maximum grant amounts and
establish an appropriate process for evaluating need and making grant
awards.
   (f) No later than December 31, 2002, the department shall provide
an interim report to the Legislature indicating the progress of the
program established by this section, including the number of
jurisdictions accessing the program.  No later than December 31,
2005, the department shall provide a final report with updates to the
data contained in the interim report and a description of the
achievements by local agencies participating in the program.
   50544.  (a) One hundred million dollars ($100,000,000) of the
funds appropriated for purposes of this chapter in Item 2240-114-0001
of the Budget Act of 2000 shall be used to award incentive grants to
cities, counties, and city and counties to be used for capital
outlay projects, as defined by Section 7914 of the Government Code,
that serve to benefit the community.  Eligible projects include, but
are not limited to, traffic improvements, neighborhood parks, bike
paths, libraries, school facilities, play areas, community centers,
and police and fire stations.  Grants shall be provided through a
grant agreement that requires the recipient to provide to the
department a report on the number of residential building permits
issued during the reporting period, the number of certificates of
occupancy issued for those units, and the amenities purchased or
built.
   (b) To be eligible for a grant pursuant to this section, a local
government shall do both of the following:
   (1) By the end of the calendar year in which unit production is to
be counted, have an adopted housing element that the department has
determined pursuant to Section 65585 of the Government Code to be in
substantial compliance with the requirements of Article 10.6
(commencing with Section 65580) of Chapter 3 of Division 1 of Title 7
of the Government Code.
   (2) Have a demonstrable and significant increase in the issuance
of residential building permits issued between January 1, 2001, and
December 31, 2001, over the average number of building permits issued
annually for the most recent 36-month period that can be calculated
prior to January 1, 2001.  The department shall establish a benchmark
level to be achieved in order to establish eligibility for funding
based on criteria including a survey of economic forecasts to be
conducted by the Department of Finance no later than November 30,
2000.
   (c) Grant amounts shall be determined as a per-unit incentive
weighted for high, medium, and low employment demand areas.  In
addition, the department shall provide additional incentives for
units in projects within eligible communities that meet criteria
designed to encourage planning priorities such as affordability,
multifamily housing, and infill development.  The department shall
establish the definitions and measurement specifications for the
incentive criteria to be used to determine grant amounts that are
easily and objectively verifiable.
   (d) Funding shall be provided as soon after January 1, 2002, as is
reasonably possible, allowing time for receipt by the Department of
Finance of year-end production figures as well as other information
necessary to apply the established criteria.  If all funds are not
expended after the end of the first calendar year in which housing
production is counted, the department may continue the program into
the following year if it determines there are adequate funds to
administer the program.  If residential production within eligible
jurisdictions exceeds the department's projections, per-unit
incentives shall be prorated within the appropriated funding amount.

   (e) The department shall solicit and consider comments from
interested parties on the criteria that shall be used for determining
the amount of funds granted per unit.  The department may deny
funding to any jurisdiction that it determines, based on reasonable
evidence, failed to issue residential building permits on a timely
basis between the effective date of this chapter and January 1, 2001.

   (f) No later than December 31, 2002, the department shall provide
an interim report to the Legislature indicating the benchmark levels
of production established, the number of jurisdictions accessing the
program, the number of residential units building permits issued
above the established benchmark, and the success of the additional
incentives in achieving state housing policies.  No later than
December 31, 2005, the department shall provide a final report with
updates to the data contained in the interim report and a description
of the capital outlay projects achieved by local governments through
the program and information regarding the number of certificates of
occupancy issued in relation to the residential building permits
issued.
   50545.  Five million dollars ($5,000,000) of the funds
appropriated for the purposes of this chapter in Item 2240-114-0001
of the Budget Act of 2000 shall be transferred to the Rental Housing
Construction Fund created pursuant to Section 50740 to be used for
urban predevelopment loans pursuant to Chapter 3.5 (commencing with
Section 50530), subject to the following provisions:
   (a) All projects shall be located within one-half mile of an
existing or planned transit station proposed for development.  For
these purposes, a transit station is a site where two or more mass
transit modes, or one transit mode with three or more mass transit
lines, are accessible to the public.
   (b) Notwithstanding any other provision of law, the department may
establish interest rates between 3 and 7 percent based on the
department's analysis of project need.
   (c) The limitation specified in subdivision (a) of Section 50532
shall not apply to this appropriation.
   (d) In addition to the activities eligible under the Urban
Predevelopment Loan Program, funds awarded pursuant to this section
may be used for master environmental impact reports or other
environmental documents that would access potential impacts in
advance and propose measures to mitigate negative impacts.
   (e) Awards made pursuant to this section shall require a 50
percent match from the local agency in which the site is located.
   (f) In addition to those eligible sponsors specified in
subdivision (e) of Section 50530, eligible sponsors shall include
limited liability corporations and limited partnerships where all
managing members or general partners are nonprofit organizations.
   50546.  The administrative expenses of the department shall not
exceed 3 percent of the amount available for the purposes of this
chapter.
